Grain Council Report March 2022
Grain prices for Irish cereals remain at record high levels. Old crop (2021 harvest) prices for feed wheat and barley have remained within a price band of €295-305/t for the last 8-10 weeks which is an unprecedented duration. For the coming season, new crop September 2022 futures on the Paris MATIF market are somewhat lower at €262/t – see table below – but according to a recent AHDB report 2022 futures prices are still 22- 24% higher than the 5-year average price for feed wheat.
The fundamental factor behind the very high old crop grain prices is tight supplies emanating from low international stocks. According to the recent World Agriculture Supply and Demand Estimates report from the USDA, global wheat stocks are presently at a 5-year low and this is underpinning the high prices for both old and new crop wheat. This is in turn also drives up prices of other grains such as barley and maize.
Irish delivered grain prices are also affected by the very sharp increases in freight costs which are being experienced in supply chains around the world. According to grain industry sources, shipping costs for the small coaster grain ships which typically service Irish ports are now 2.5x times higher than 2 years ago.
|Spot Price €/t||% Change vs previous month||Glanbia Sept 2022* Green (€/t)||Nov/Dec 2022* Dried (€/t)|
|IRL Feed Wheat¹||300||0%||218||255-260|
|IRL Feed Barley¹||295-300||0%||208||246-250|
|Oilseed Rape Paris²||702||-3.5%||–||620|
|Maize ex. Port¹||290||–2%||N/A||260|
In order for grain prices to decline, a very significant change is required in grain supply for the 2022/23 period. However, current forecasts suggest that grain stocks will see only a marginal rise. The International Grains Council estimates that wheat plantings will rise 3%, which should favour production, the global planted area for barley is estimated to remain unchanged however. MARS, the EU crop monitoring division also reports that the wider European cereal crop condition is excellent following the mild and dry winter period.
For world maize supply, prospects are slightly less certain, south American crops will play a greater role in the overall global supply picture. A record Brazilian maize crop is still expected in the first half of 2022, despite reports of drought concerns in this country. Going forward into the late spring as planting commences, markets will be highly sensitive to further news and developments in the large maize producing regions of North America. At a political level, markets will also be highly sensitive to the current tensions between Russia and Ukraine.
Soya and Oilseeds
Soybean meal has increased sharply in recent weeks following news of drought in Brazil and Argentina. In contrast to other feed materials, soya prices had stayed relatively consistent throughout 2021 with lower supply concerns and adequate stocks. However, following the news of the USDA report downgrading production in south America market, prices rose significantly. AHDB reports suggest soya markets will likely remain elevated due to a combination of concerns over supply and high global demand for all crops within the global oilseed complex.